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No the concept of "word" requires a boundary condition for when something is a word.
In my example i used a space, but it can be space / tab or colon (any character not part of a word) ... searching for groupid's in /etc/passwd requires a regex like ':[0-9]+:500:' when searching for group 500 (the number in front is the uid in this case it serves as anchor to not match a directory with 500 or a user with id =500

the search string used by grep is called a regular expression, or regex for short.
if you want extended regex's then zegrep might be a better tool.

the '>output.txt' will send the data to the file named output.txt which will still reside on the linux system.

>>file appends to a file
<file uses file as standard input.

btw. the >, >> & < are handled by the shell and there should be NO " or ' around them. (that will cause them to be passed to the program, grep will respond with some error about file not found.